Dateline: Granada, Nicaragua
Recently, Granada has appeared in articles about international relocation. Not Granada, Spain. Granada, Nicaragua.
You mean the poorest country in Central America?
Wasn’t that the place where the United States government once backed the Contras in their battle against the Sandinistas?
Yes, that Nicaragua.
Before you rule out Granada, consider these points in its favor:
- The war is over. It has been for quite a while.
- Furthermore, during the civil war, Granada – regarded as a prime vacation spot for diplomats – stayed safe from the cross-hairs of conflict.
- Despite its poverty level, Nicaragua maintains a relatively stable government.
- Bloomberg notes that Nicaragua has the lowest homicide rates in Central America
When the war ended, Nicaragua evolved into a thriving tourist destination, with Granada as its epicenter.
Outdoor enthusiasts ventured out to the country’s lakes and volcanoes.
History lovers and photographers explored Granada’s cathedrals, cobblestone streets and Colonial architecture.
Some tourists turned into full-time residents.
Other potential expats could not wrap their minds around moving to a country with a Sandinista president. Thus far, these fears have kept Granada from turning into a typical Latin American “Gringolandia.”
Still, with Tim Leffel and other expat websites promoting Granada as the “in” place to relocate, Granada might be the next big trend.
If you’re thinking about moving here or starting a business, carpe diem before it gets too hip to do so!
Granada Cultural Heritage
In 1524, Spanish conquistador Francisco Hernández de Córdoba founded the first “European” city in the Americas.
He called it “Granada,” giving it the same name as the ancient city in Spain.
Thanks to its Moorish and Andalusian ambiance, some people refer to Granada as La Gran Sultana.
These historic features, as well as its spectacular location along Lake Nicaragua, are Granada’s main selling points.
Although its proximity to Miami attracts expats who want to stay close to family, Granada looks nothing like Miami. For many, this is a good thing.
While high-rise buildings are popping like up like phallic symbols all over Latin America, Granada has managed to keep up its Colonial charm.
Colorful, clay-roofed casitas line the pedestrian-friendly streets. In fact, purchasing and restoring Colonial homes is a viable business opportunity in Granada, Nicaragua.
Buying, Renting and Cost of Living in Granada, Nicaragua
The Global Property Guide notes that US expats have purchased and renovated 50 percent of the Spanish Colonial homes in Granada.
As such, the market for Colonial homes is somewhat inflated. Large, furnished Spanish Colonial homes, with multiple bedrooms and bathrooms, are selling at $300,000 to $500,000 (US).
Anything priced under $100,000 will require substantial renovation. Renovation costs run from $20,000 to $50,000.
If you want to test the waters before you buy, rentals range from $300 to $600. Depending on your lifestyle, expats can get by on a monthly income of $1,000 to $2,000.
So what draws people to Granada, Nicaragua?
Some claim the city offers investors and renters the best of both worlds.
Although Granada oozes Colonial charm, the city boasts modern conveniences such as reliable Internet, telephone service and utilities, state-of-the-art fitness centers, health food stores and upscale gourmet restaurants.
On top of that, the government offers enticing incentives for moving here. One of them is called Decree 694.
About Decree 694
In order to compete with other Central American countries, the Nicaraguan National Assembly initiated Decree 694.
Under this decree, expats age 45 or older, with monthly incomes over $600, are eligible for the following benefits:
- You can import up to US $20,000 worth of household goods for your residence, duty-free
- The government will allow you to bring in one vehicle valued at US $25,000 or less, duty -free
- You may bring one additional vehicle to Nicaragua with a value of US $25,000 or less, duty-free, every five years
- If you construct residential homes, the Nicaraguan government awards you of a tax exemption of $50,000 (US) off the cost of building materials.
In addition to Decree 694, the government offers special incentives for expats wishing to invest in Nicaragua.
Doing Business in Nicaragua
In 1990, notes Matthew Timms of Business Destinations, policy makers introduced free-market reforms that privatized 350 formerly state-run businesses.
During that same year, the government launched an initiative to encourage foreign investment.
Investors and expats from the United States and Europe, along with the government of Spain, purchased run-down historic buildings, and converted them into new homes, rental properties and businesses.
Thanks to Law 306, expats wishing to start tourism-related businesses can benefit from special incentives.
Law 306 for tourism-related businesses
Law 306 provides generous benefits to businesses that are tourism-related. Seeing the advances from tourism that Costa Rica enjoyed, Nicaragua enacted a progressive tax incentive law in 1999 as an effort to boost foreign and local investment in its tourism sector.
Examples of large and small businesses enjoying the benefits of Law 306:
- Hotels, condominiums
- Tour operators, especially ecotourism
- Air transportation services
- Water transportation services
- Rental of ground and water vehicles to tourists
- Small hotels and Bed & Breakfast operators
- Sportfishing charters
- Food, drink and amusement services
- Investment in filming of motion pictures and events beneficial for tourism
- Investments in tourism infrastructure and connected tourism equipment
- Development of Nicaraguan crafts, recovery of imperiled traditional industries, production of typical music events and of folklore dances, and publications and materials of tourism promotion.
Upon approval, the business owner is able to take advantage of not paying sales tax or import taxes on certain items required to run the business. It also includes exemption from other taxes such as:
- Exemption from having to pay the transfer tax on the purchase of your property (1 percent of the purchase price)
- Exemption from having to pay property tax on your property for 10 years
- Exemption from having to pay income tax on 80 percent to 100 percent of rental income earned from your property for 10 years